Problem 3 Perfect Complements Consider Trevor from our previous problem set, who begins his day with a strawberry milkshake. To prepare it, he mixes milk, :rl, strawberries $2 and does so always in his favorite: proportion one glass of milk to two strawberries. What is his utility function? Answer all the questions from Problem 2, from a) to e) using these preferences. Problem 2 Demand curves Benjamin spends his time either watching movies 321 (he uses " on demand\" option, cable TV) or listening to songs - MP3 downloaded from the Internet (3:2). His pref- erences are described by U (131,122) 2 ln(:cl) + ln(9:2). Answer the following questions: a) Derive Benjamin's demand for movies and MP3 les as a function of prices 331, p2 and his income m. (do not use Magic Formula but instead derive demand using \"two secrets of happiness\"). b) Fix the price of MP3 at p; = 1, and income on m = 10. Find the price offer curve (give an exact formula x2 = f (1:1)) and plot it in the commodity space. Find the demand curve I1 = f (p1) and plot it in the graph (with 301 on vertical axis and :31 on horizontal axis). 0) Is 1:1 an ordinary good or a Giffen good? Explain. d) Now x p1 = 1 and p2 = 1. In the commodity space, plot the income offer curve. Besides, in two separate graphs, plot Engel curves for both movies and MP3 les. Argue that the two commodities are normal (not inferior). Problem 6 2 e) For the demand functions from point a), determine whether the two goods are gross complements, substitutes, or neither